ECL Stock Falls in Pre-Market Despite Q4 Earnings Beat, Margins Expand

Ecolab Inc. ECL has reported fourth-quarter 2025 adjusted earnings per share (EPS) of $2.08, up 14.9% year over year. The bottom line surpassed the Zacks Consensus Estimate by 0.8%.

GAAP EPS for the quarter was $1.98, up 19.3% year over year.

Full-year adjusted EPS was $7.53, reflecting a 13.2% increase from the year-ago period. The metric topped the Zacks Consensus Estimate by a penny.

Shares of Ecolab lost nearly 0.6% in today’s pre-market trading.

ECL’s Revenue Details

Revenues grossed $4.19 billion in the reported quarter, up 4.8% year over year. The metric topped the Zacks Consensus Estimate by 0.1%.

Ecolab’s organic sales were $4 billion, up 2.9% from the prior-year period.

Ecolab Digital sales increased 24% to $99 million, with double-digit growth across both software and enabling hardware subscriptions.

Full-year revenues were $16.08 billion, reflecting a 2.2% improvement from the year-ago period on a reported basis (up 3% on an organic basis). The metric lagged the Zacks Consensus Estimate by 0.2%.

Ecolab’s Segmental Analysis

The Global Water segment’s fixed currency sales of $2.02 billion marked 2.5% year-over-year growth. Organic sales were $2 billion, up 2.2% year over year. The segment’s underlying sales grew mid-single digits, excluding Basic Industries and Paper. Light & Heavy’s progress was led by strength in Global High-Tech, improved growth in downstream and solid gains in manufacturing, which offset softer sales in Basic Industries. Robust new business gains in Food & Beverage, which leveraged the One Ecolab growth strategy, drove a further acceleration in sales growth. Lower Paper sales reflected new business wins that were offset by soft customer production rates.

The Global Institutional & Specialty arm’s fixed currency sales were $1.49 billion, a year-over-year uptick of 2.8% on a reported basis. Organic sales were also $1.49 billion, up 2.7% year over year. Institutional unit’s underlying performance reflected good growth with hospitality customers and modestly higher sales to hospitals. Specialty unit delivered continued strong sales growth, driven by robust new business wins and continued value pricing.

The Global Pest Elimination segment’s fixed currency sales of $307.2 million improved 6.7% year over year on a reported basis. Organic sales were $306.8 million, up 6.6% year over year. Strong organic sales growth was led by robust gains in food & beverage, restaurants and food retail, which continue to benefit from the One Ecolab growth strategy.

The Global Life Sciences arm’s fixed currency sales and organic sales were $191.4 million each, reflecting year-over-year growth of 6.5% on both a reported and organic basis. Per management, year-over-year fixed currency and organic sales growth was driven by continued double-digit growth in bioprocessing and strong growth in pharmaceutical & personal care despite ongoing capacity constraints within Life Sciences’ industrial water purification business.

Ecolab Inc. Price, Consensus and EPS Surprise

Ecolab Inc. price-consensus-eps-surprise-chart | Ecolab Inc. Quote

ECL’s Q4 Margin Analysis

In the quarter under review, Ecolab’s gross profit improved 6.4% year over year to $1.85 billion. The gross margin expanded 69 basis points (bps) to 44%.

Selling, general and administrative expenses increased 1% year over year to $1.06 billion.

Adjusted operating profit totaled $786.6 million, increasing 14.6% from the prior-year quarter. The adjusted operating margin in the quarter expanded 162 bps to 18.7%.

Ecolab’s Financial Position

The company exited fourth-quarter 2025 with cash and cash equivalents of $646.2 million compared with $1.96 billion at the end of the third quarter. Total debt at the end of fourth-quarter 2025 was $8.24 billion compared with $8.07 billion at third-quarter end.

Meanwhile, Ecolab has a consistent dividend-paying history, with five-year annualized dividend growth of 8.09%.

ECL’s Guidance for Q1 & 2026

Ecolab has provided its outlook for the first quarter and has initiated the full-year 2026 guidance.

The company expects an adjusted EPS of $1.67-$1.73 for the first quarter, suggesting an 11%-15% rally from the year-ago period’s actual. The Zacks Consensus Estimate is pegged at $1.69.

Including the acquisition of Ovivo Electronics, ECL expects reported sales to increase 7%-9% and organic sales to rise 3%-4% in 2026.

For 2026, Ecolab expects an adjusted EPS of $8.43-$8.63 (indicating an uptick of 12%-15% from the comparable 2024 period’s reported number). The Zacks Consensus Estimate for adjusted EPS is pegged at $8.44.

Our Take on Ecolab

ECL exited the fourth quarter of 2025 with better-than-expected results. The company registered a robust year-over-year uptick in its top and bottom lines, along with solid performances across all segments. The expansion of both margins bodes well for the stock.

Per management, Ecolab’s performance in the reported quarter was led by accelerating organic sales growth across most businesses and significant operating income margin expansion. Management also confirmed that the company is driving better-than-expected savings from its One Ecolab productivity initiatives and now anticipates annualized savings to increase from $225 million to $325 million by 2027. The recent acquisition of Ovivo Electronics ultrapure water business further strengthens Ecolab’s Global High-Tech business, creating an end-to-end water circularity offering for microelectronics customers and expanding the size of one of its most significant growth engines. This looked promising for the stock.

However, the ongoing soft market demand in Ecolab’s underperforming businesses, Basic Industries and Paper, was disappointing.

ECL’s Zacks Rank & Key Picks

Ecolab currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader medical space that have announced quarterly results are DaVita Inc. DVA, Cardinal Health, Inc. CAH and Doximity, Inc. DOCS.

DaVita reported fourth-quarter 2025 adjusted EPS of $3.40, beating the Zacks Consensus Estimate by 5.1%. Revenues of $3.62 billion surpassed the Zacks Consensus Estimate by 2.7%. It currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

DaVita has a long-term estimated growth rate of 20.2%. DVA’s earnings surpassed estimates in three of the trailing four quarters and missed once, the average surprise being 1.2%.

Cardinal Health, carrying a Zacks Rank of 2 (Buy) at present, reported second-quarter fiscal 2026 adjusted EPS of $2.63, beating the Zacks Consensus Estimate by 9.9%. Revenues of $65.63 billion topped the consensus mark by 0.9%.

Cardinal Health has a long-term estimated growth rate of 15%. CAH’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 9.3%.

Doximity reported third-quarter fiscal 2026 adjusted EPS of 46 cents, beating the Zacks Consensus Estimate by 4.6%. Revenues of $185.1 million surpassed the Zacks Consensus Estimate by 2.2%. It currently carries a Zacks Rank #2.

Doximity has a long-term estimated growth rate of 16.1%. DOCS’ earnings surpassed estimates in each of the trailing four quarters, the average surprise being 19.9%.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research